IPO staff transfer as listings falter

Published on Friday, 20 Apr 2012

Signs point to new IPOs on the Hong Kong exchange.Photo: Edward Wong

After dominating the global initial public offering (IPO) market for several consecutive years, listings on the Hong Kong Stock Exchange have been noticeably scaled back from the beginning of the year amid jittery investor sentiment.

Terence Ho, Ernst & Young Greater China strategic growth markets leader, says that despite difficult current market conditions, there are a number of positive sign of worldwide fundraising activity. "Companies are no longer simply listing on their national market, and by default 2012 is already seeing more cross-border activity, with companies from all regions listing on exchanges like Hong Kong, London and the United States," says Ho.

For professionals working in the IPO environment, Martin Cerullo, managing director of recruitment firm Alexander Mann Solutions, says the most evident impact can be seen in the front-office divisions of major investment banks.

Where layoffs are avoided, Cerullo says professionals with the relevant skills are redirected into deals in mergers and acquisitions (M&As) and private equity transactions.

"In some cases, banks that have a limited IPO population have orchestrated internal moves into other roles such as strategy and corporate development and new business development," says Cerullo.

As the Hong Kong Stock Exchange seeks listings from other markets and different industries, such as mining, Cerullo says industry knowledge is desirable but not essential. An ability to work with clients and deliver high quality services is a key asset.

Rebecca Chan, senior manager for finance at Michael Page in Hong Kong, takes a similar view. "It is always an advantage to have knowledge and experience in different industries to broaden one's horizons. However, IPO experience is transferrable. For example, a professional can take part in an IPO listing for a mining company and, later, an energy business."

Chan says that although there has been a pause in IPO listings over the past couple of months, more and more companies, especially mainland-invested corporates, are looking into preparing pre-IPO activities in Hong Kong. "The trend is continuing in the energy sector and growing in the China retail business," notes Chan.

Chan says IPO specialists from banking, finance and accounting backgrounds have more expertise to offer than just IPO technical know-how. "They can continue their career in investor relations, in M&As, investment banking or corporate restructuring and much more," says Chan.

John Mullally, manager of financial services at Robert Walters, says IPO specialists are still being recruited, especially at the responsible officer and principal level, as they can work fairly independently and bring in deals without a great amount of infrastructure. "The newer entrants into the market and the boutique investment banks are especially interested in such individuals," he says.

Mullally says there are signs the pipeline for IPOs is relatively healthy. "There will be a pick-up over the next six months relative to the previous six; the increase in the number and size of IPOs will not be seismic, but there will be a steady increase," he adds.